Banking & Finance 2023

1. Loan Market Overview

1.1 The Regulatory Environment and Economic Background

The elevated rate environment has had a similar impact on the bank finance markets in Canada as it has in the US and European markets. While the large Canadian banks have generally continued to remain open to new lending, the cost of new money to domestic borrowers and issuers has had a dampening effect on new money financings and refinancings. This coincides with the softer Canadian M&A market observed through much of 2022 and early 2023.

While regulatory concerns have had less of a direct impact on Canadian banks than those of its neighbour and largest trading partner, the current economic cycle has caused the largest domestic lenders to more carefully analyse credits, moderately tighten lending standards and increase pricing margins. As a result, many borrowers have looked more to amend and extend terms where possible rather than pursuing refinancing options in order to avoid